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tv   Nightly Business Report  PBS  October 3, 2013 6:30pm-6:58pm PDT

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this is night "nightly busi report" with tyler mathisen and susie gharib brought to you by. >>, financial tools for an ever changing financial world. our dividend stock advisor guides and generate income during a period of low interest rates. we a we are wary in washington, magnifying the tensions over the gridlock surrounding the government shutdown and a looming possible default of u.s. debt and that sends investors running for cover. dancing on the ceiling, what does happen if the u.s. doesn't raise the debt limit and defaults? we'll look at the ramifications. and innovative ways how
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hospitals and drugstores are looking to improve health care, we'll talk to the president of cvs minute clinic that and more on this very busy thursday, october 3rd. good evening everyone i'm sue herrera filling in for tyler mathisen. >> i'm susie gharib. forget the government shut down. today it was about the looming debt crisis. words coming from the u.s. treasury today saying a default on the nation's debt could be quote catastrophic. a scenario the treasury says will be worse than the recession we're emerging from and pushed the markets sharply lower by the open. by midday there was slight relief after john boehner would not allow the u.s. to default. boehner spokesperson says the speaker maintains the u.s. will not default. that brought stocks back momentarily and if that weren't enough, may ham outside the u.s.
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capital after police shot and killed a woman who tried to ram her car through security barricades at the white house and then exchanged gunfire with the police. all and all, it looked like it ended like this after the market closed. the dow fell 136 points closing just before the psychologically important 15,000 threshold the nasdaq lost 40 and s&p off 15. unless congress settles the debt ceiling crisis within the next two weeks, the u.s. treasury will reach the limit on october 15th. what then? >> good evening. markets turned their attention today beyond the government shutdown to what happens if the debt ceiling is breached and the government can no longer borrow? is what we know, in that event government spending has to equal revenue plus the cash on hand. what that likely maybe means is government spending will fall by a third of 108 billion-dollar spending in the first month, a
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contraction of the economy. the economy will be smaller because there will be less government spending. what e conn miconomiest believe spending. the dollar could plunge, the stock market could plunge with it and interest rates are seen higher in that event. what they are worried about, what is possible here is a global recession as the effect of a weaker u.s. economy is felt in countries around the world and a potential massive disruption in financial markets. the treasury department warning of catastrophic consequences in the event the debt ceiling is breached and they are saying there could be a financial crisis that could rival or be worse than the 200 8 financial crisis, looking to the debt ceiling breach which would happen about october 17th according to current estimates and they don't like what they say. for "nightly business report," i'm steve lease man. >> let's not forget there is a
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partial government shut down in the third day and furlough of 800,000 federal workers. one major defense contractor, united technologies announcing planning to furlough thousands of employees if the shutdown drags into next week. it might not be alone. dominic chew has more. >> reporter: the shut down got real. aerospace and defense contract tomorrow united technologies released a statement that says it expects to furlough around 2,000 workers on monday, october 7th. they are located in connecticut, florida and alabama at the aircraft division that makes the well-known black hawk helicopter. it's the state's single largest employer. if the shutdown continues into next month it could furlough a total of 5,000 employees affecting all parts of the company. the issue has to do with a lack of inspectors from the contract management agency or dcma.
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they are deemed non-essential federal employees but without them, united technologies can't manufacture aircraft. and they aren't the only company affected by or voicing concerns over the government shutdown. earlier today the president said the shutdown is leading to further uncertainty with business leaders tied to d.c. >> companies worry businesses will be disrupted because in an area like maryland, virginia where there are a lot of federal workers, you don't know how that will impact the economy. >> reporter: boeing said a lack of u.s. aviation officials could delay jetliner deliveries. british based bae systems says pay and benefits for u.s. employees won't change for at least this week, but they continue to monitor the possible need for furloughs going forward. one thing seems certain, though, the longer the shutdown lasts, the more furloughs we could see.
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dominic chew, "nightly business report" in new york. and joining us now to talk more about what is happening in washington and what the implications mean for debt ceiling talks is andrew freedman. welcome, pleasure to have you here. >> thank you. >> were you at all encouraged by this speaker's indication he would not let the united states default? does that give you the indication there is movement and progress on the hill? >> i don't know that it means there is any progress, but i am hardened by it nonetheless. i don't think we'll see a default here. the house of representatives is an unusual place. the speaker controls what legislation is introduced in front of the house. normally the speaker does not introduce legislation unless the majority of his party wants that legislation introduced. that's why he's been going ahead and having the obamacare caveats but the subdex of what happened
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today is he said look, if we get to the point where we're on the cusp of defaulting on the debt, i'll introduce legislation that raises the debt limit and if necessary, we'll pass that with democrats and moderate republicans supporting it and that will alleviate the problem. >> andrew, what do you think of some people saying today all of this very sharp language about catastrophic, the potential catastrophic consequences, if there is a default and that this could become the worst recession is part of a strategy to get the markets to sell off because that would trigger the congress to take action and close the deal on this. do you buy into that? >> well, i don't know if it's that specific but i think the president is absolutely ratcheting up the rhetoric. the republicans feel cornered now. they demanded changes to obamacare. that's a non-starter. there is plenty of things to be negotiated but that's not one of them. for the president to say look,
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there is a problem here and you have to deal with it or we'll have a catastrophic problem and throws it back into boehner's court. what does boehner's office indicate, don't worry, we'll take care of it and not let anybody default on the case. it's the case the president is ratcheting up the consequences, putting pressure on boehner and boehner is holding off. >> what about the crisis of confidence main street seems to be entering into about the fact that once again, we're being taken to the brink regardless of what party you're talking about, it seems they are willing to take the u.s. economy to the fiscal cliff once again and that main street is starting to suffer from that? >> there is no question. i mean, main street has been suffering all along. go back to the fiscal cliff. you were right to elude to it. that was a midnight deal and passed because boehner, in fact, introduced legislation. the bulk of republicans didn't want it.
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i think there is a brings man ship going on and the republicans feel, in the house at least, going into an election year, they don't have to worry about the general election because the districts are largely republicans but worry about the primaries. they don't want to be challenged by someone further on the right so everybody that's a republican in the house is trying to protect this plank in that way. >> thank you, andrew. appreciate it very much. >> thank you. the u.s. is expected to become the world's largest producer of oil and natural gas this year. according to the wall street journal, the u.s. may have over taken russian output. the u.s. ennear me information says in july we produced the equivalent of 22 million barrels of oil, gnat yell gas and fuels every day. >> without all that home grown enne ener energy, they are trying to break the oil, and doing that by changing what we put in the gas tanks.
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the future of refining may include natural gas, bio mass and solid waste. jackie deangelis has the story. >> reporter: turning into gasoline for cars and jets, sounds like a novel concept but been explored for years. now several companies including thomas green energy, trying to take the technology a step further to make that dream a reality. here the company is showcasing technology and the practical applications of it for potential investors. they raised $61 million to date but need roughly 200 million more to break ground on the facility they are planning sometime next year. >> we believe that alternative energy and renewable energy, both of them are very important to israel, to united states or to any country who would like to have energy indepen dance.
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>> reporter: what sets them apart, it's more efficient and can reach a larger scale and that's a great recipe for profitability. >> the operating costs are a $1.65 per gallon. >> reporter: what about longevity of the business model? it assumes regular gas prices stay at these levels and that gas doesn't see any anything increase. >> the natural gas prices have to go into the double digits for us to be uneconomic given the current estimate of gasoline prices. so what would have to happen is both natural gas prices shooting up and gasoline prices staying constant for us to be in danger. >> reporter: with respect to scale, the commercial facility will eventually be able to produce roughly 25 to 28 million gallons of gas a year, not a ton in the scheme of things so it will take time and also money to
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make this initiative a reality, but if they can do it, it could be game changing. for "nightly business report" i'm jackie deangelis. >> and a little later in the program, why are drugstore chains spreading the world about the affordable health care act? is in it for them. and what the new health rules mean for hospitals but first, how the international markets faired today. twitter late today making public it's documents for it's initial pub lulic offering. kayla joins us. >> a tweet lit this afternoon announced twitter would follow s
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1 and gave us a taste of what the social network would be offering when it goes public in about a month's time. it will raise about a billion dollars offered by seven banks and has 218 million users in events like hurricane sandy and reelection of barack obama as moments in twitter's history. it's revenues were a little light, $253 million at the end of june and did post a net loss for that period. a lot of investors want to know how much money twitter is actually making, how profitable it can be and how highly it's evaluated. some say it could be valued as high as $15 billion when it does go public in about a month. >> kayla, thank you so much. the world's largest wine maker trades at an all-time high today and that's where we begin tonight's market focus. the alcohol giant posting a 35% rise in earnings from a year ago thanks to stronger beer sales. ? june they brought the u.s.
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business from anheuser-busch. shares rose more than 3% today to $60.16. shares of eli lily tumbled today. the drug is hitting the 2014 revenue target might be challenging. it blamed it on slower growth in emerging markets and devaluation of the japanese yen and buying back $5 billion of the stock. the stock jumped to $48.80. shares of tesla fell following a video of a car fire that's circulating on the internet. it shows the model s roadster bursting into flames. shares fell 4% today to close at $173.31. shares of the world's largest apparel company, pvh rose on news it will sell all of gh bass and company shoe units to clothing maker g 3 apparel.
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it was shown to beat calvin kline and tommy hill figger. g 3 gained nearly 3% to $55.45, which is a new high. from hospitals to drugstores, what the big chains are doing to get your new health insurance business. that's straight ahead but first, a look at commodities, currencies and treasuries. it's day three since the new health exchanges came online. but arstill delays and one big company is getting a shot in the arm. tenant health care jumped 5.5% today and up about 15% this week
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following the deal to by van guard health systems. investors are encouraged it has a winning strategy to deal with the new healthcare laws. joining us now we're happy to have mr. fedder. nice to have you. >> nice to be here. thanks for inviting me. >> for the drama and uncertainty about the affordable care act going on in washington, you're still going ahead and behaving as this act will become law. what is your strategy? >> well, the strategy is actually rather straightforward. it's very important in this environment to deliver greater value to our customers, and that comes in the form of increasing levels of clinical quality and lower costs. affordable care act or not, we would have pursued that. some of the things we're doing differently are preparing ourselves to be positioned effectively for the increasing numbers of people who have health insurance. >> you have been signing up on contracts with a lot of these insurance exchanges that you will be part of their networks for uninsured americans.
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what has been going on so far, how is it going? >> that's an effort we're under taking for nearly a year now. we were enthusiasm about the potentials, we thought it would be consumer friendly transparent way people would buy insurance for health, just much in the way as they buy many other things over the internet or in marketplaces. so we actively engaged with insurance companies beginning, you know, virtually a year ago so we would be in network in the insurance programs being offered on exchanged and i'm pleased in about 80% of our markets, we're in some of the most competitively priced insurance plans offered in the exchanges. >> the other part of the strategy is you've been also buying up a lot of hospitals, the van guard health kedeal is e last one that adds hospitals. some would argue having the huge hospital systems might not be
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the best way to keep costs down and keep quality of health care up. you know, tell us what your plan is here. is bigger better, i guess i'm asking you? >> yeah, bigger is definitely better. this is a fragmented industry for a long time and when you're a bigger system and we're one of the largest in the united states, we're able to take the technology we use to improve clinical quality and apply it across a bigger platform and drive efficiencies in the administrative parts of health care that are significant. we can drive efficiencies in the supply chain, in the revenue cycle and airplane yreas that d affect patient care or enhance the patient's stay in the hospital. bigger is better and it's time the industry consolidates. >> last night we had the ceo of the cleveland clinic on and he said because of a drop off in revenues and healthcare is changing, they have to cut more than $300 million in costs,
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possible layoffs. is tentative going to have to do the same thing at some point? >> we've been cutting the cost for the past nine years. it's among the best in the industry. i saw the interview and i think part of the point toby was trying to make is this industry for three years now has been dealing with fairly significant cuts in medicare, much of which was designed to pay for the affordable care act, or at least contribute our fair share to the affordable care act,and hospitals are going to be under relentless pressure for the foreseeable future and scale helps you deal with that. >> good luck to you. thank you for coming on the program. we appreciate it. >> thanks for having me on. >> trever fedder, the ceo of tenet healthcare. when medicare part d launched, pharmacies saw a big boost in business and if the initial interest in the affordable care act's new health insurance exchanges lead to high
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enrollment, it could mean a new source of revenue as they help spread the word. bertha coombs has more. >> reporter: the major drugstore chains want to be more than the corner pharmacy. they play a central role during flu season and aim to do the same for the millions of americans that gained health coverage through the affordable care act. >> i think in general, their ability to play more parts of obamacare is key. >> reporter: walgreens, cvs and rite aid are helping educate customers. a new wave of insured patients could be a big bump in profits from the core business of filling prescriptions. >> the way they do that is by helping encourage people uninsured to enroll in exchanges and hope that ultimately turns into higher script outization in
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stores. >> reporter: so far the clinics haven't been a profit driver, but that could change in 2014 as obamacare coverage begins and millions of newly insured will seek care during the likely peak of cold and flu season. >> when a number of people come into the system, it tends to stress the provider network, meaning there are only a finite number of primary physicians to care for those people. >> reporter: for those who enroll in lower cost plans, the clinics could be an attractive place. >> they are less expensive so if it's in your network if you're under a higher deductible plan, your first stop may be a clinic at a pharmacy. >> reporter: but still, the drugstores could face some pretty tough sales comparisons in the fourth quarter. last year, saw very strong start to flu season.
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we could start this year and post head winds for their shares. cvs care mark is edager to get your business not just to buy tooth paste but keep you healthy. they are called minute clinic. the company plans to double the number of clinics over the next four years. joining us now, president of minute clinic and associate chief medical director. thanks for coming on the program. >> thanks for having me. >> you're really counting on getting business from all of these americans who don't currently have insurance. i mean, how much business are you expecting to get coming to your minute clinics? >> minute clinic and all of our primary care systems face a significant shortage of primary care physicians. we expect that to reach 45,000 doctors in 2020. if you take that the population
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has a pchronic problem with disease and problems we enter a period where we're bringing millions of additional patients into the system with the affordable care act, and the simple fact is we do not have enough physicians to provide the care. that's where the nurse practitioners at minute clinic can support the primary care physician medical home around the country. we've been rapidly expanding the clinics. we have 740 clinics now in cvs pharmacies in 27 states. we added 300 clinics in the last three years and expect to get to 1500 in 2017. we have a walk in basis seven days a week and nurse practitioners use evidence based guidelines and allows access to care at a time when we need it. >> do you have anyway of quantity flying how much impact the affordable care act will have on the new number of people that are going to be able to access these clinics? maybe in the past if they didn't
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have insurance, they didn't want to fork out, whatever it is, $25 for the flu shot, now they can do that. >> yeah, we accept coverage from 200 health plans around the country and participating in the exchanges and providing access to patients. as you know, many patients have high deductible plans and our low prices can help to provide access to those patients. it's a little early to determine exactly how many patients that will effect, but we believe it will be a significant increase. >> we know a lot of the invasion is coming to health care, but to what extent do you think people are programmed to think when i'm sick, i'm going to go to my doctor or an emergency room and the idea of going to a minute clinic in a pharmacy or drugstore chain doesn't seem quite right, what do you think? >> well, many patients are really looking -- functioning as consumers and what they are looking for is value, low cost,
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easy access and good quality and at minute clinic they can walk in and be seen without appoint. our prices are low. our study found the prices 40 to 80% lower than alternative sites of care and very high quality. we used evidence-based guidelines and after we see a patient, we send a note to their physician. we can help support the primary care shortage. patients know there are alternatives to be seen and our care is high patient satisfaction. >> i know you have a large number of stores but is there one part of the united states where you think penetration is greater and where is the growth area for you as you expand? >> yeah, we're adding clinics all over the country. this week we added hawaii and louisiana and beyond that, we're forming affiliations with health systems, as well. everywhere there is a need for
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high-quality, accessible -- >> thanks doctor. we have to run. thank you so much. appreciate it. >> that's it for "nightly business report" for tonight i'm sue herrera. >> and i'm susie gharib. have a good night. "nightly business report" has been brought to you by. >>, interactive financial multi media tools for an ever changing financial world. our dividend stock advisor guides and helps generate income during a period of low interest rates. we are
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